Regulating Mergers and Acquisitions of U.S. Electric Utilities: Industry Concentration and Corporate Complication

          What happens when electric utility monopolies pursue their acquisition interests—undisciplined by competition, and insufficiently disciplined by the regulators responsible for replicating competition? Since the mid-1980s, mergers and acquisitions of U.S. electric utilities have halved the number of local, independent utilities. Mostly debt-financed, these transactions have converted retiree-suitable investments into subsidiaries of geographically scattered conglomerates. Written by one of the U.S.’s leading regulatory thinkers, this book combines legal, accounting, economic and financial analysis of the 30-year march of U.S. electricity mergers with insights from the dynamic field of behavioral economics.

 

SUMMARY OF CONTENTS

 

Part I

The transactions:
Sales of public franchises for private gain, undisciplined by competition, producing a concentrated,  complicated industry no one intended

1.  Diverse strategies, common purpose: Selling public franchises for private gain

2.  Missing from utility merger markets: Competitive discipline

3.  The structural result: Concentration and complication no one intended

 

Part II
 
The harms:
Economic waste, misallocation of gain, competitive distortion, customer risks and costs

4.  Suboptimal couplings cause economic waste

5.  Merging parties divert franchise value from the customers who created it

6. Mergers can distort competition: Market power, anticompetitive conduct, and unearned advantage

7.  Hierarchical conflict harms customers

 

Part III

Regulatory lapses:
Visionlessness, reactivity, deference

8.  Regulators' unreadiness: Checklists instead of visions

9.  Promoters' strategy: Frame mergers as simple, positive, inevitable

10.  How do regulators respond? By ceding leadership, underestimating negatives, and accepting minor positives

11.  Explanations: Passion gaps and mental shortcuts

 
 

Part IV

Solutions:
Regulatory posture, practices, and infrastructure

12.  Regulatory posture and practice: Less instinct, more analysis; less reactivity, more preparation

13.  Regulatory infrastructure: Strengthen regulatory resources, clarify statutory powers, assess mergers' effects